How much should you spend on a Google AdWords campaign? This is an important question not only because you likely have a limit to your advertising budget, but also because you want to get the most bang for your buck.

As you may know, businesses have a lot of flexibility to customize their AdWords campaigns making it a great resource for large and small businesses alike. However, this customization can make using AdWords a little daunting even for the most experienced marketing professional. Ideally, every penny you spend on marketing should not just pay for itself, but should also drive increased revenue for your business. Your return-on-investment (ROI) will determine the success of your marketing strategy. So how much should you spend on a Google AdWords campaign? Let’s take a closer look.

Successful marketing campaigns rely on careful research and planning, but sometimes you have to trial several ideas before you land on the right one. Some campaigns are an obvious slam dunk while others fall flat. Unfortunately, even the most effective marketers have experienced failure, so testing is an important part of any marketing strategy. As such, we always recommend that our clients trial a few ideas and treat this early stage as a kind of market research where you invest in a few ideas that may not pay off.

Google AdWords charges based on the number of times your ad is clicked. In other words, it doesn’t matter how many times your ad appears – you don’t pay if users don’t click. So how can you know how much your campaign will cost? Google AdWords offers a Keyword Planner Tool that estimates the cost per click for particular keywords. While this is only an estimate, you’ll at least get an idea of what that campaign will cost. Then, Google Analytics will give you an idea of how successful these AdWords campaigns have been with respect to generating traffic to your site. Those campaigns that generate more traffic to your site are likely to be the most successful.

Still, you really need to try to get a better picture of your ROI. You’ve tested campaigns and you know which ones get the most clicks, but how much did you earn for each of those clicks? To determine how much you’ve earned, you need to compare your customer value (or the average amount each of your customers spends) with your conversion rate (the number of website visitors that become customers). In fact, if you multiple customer value by conversion rate, you’ll see how much you can spend per click for each of your keywords. If you’re spending more, you’re spending too much!

So, when it comes to the question of “how much should you spend on Google AdWords,” there is no direct answer. Ideally, you want to maximize your earnings by improving your customer value and conversion rates by creating Google AdWords campaigns that turn your marketing budget into increased revenue. Here is more information on AdWords (PPC) Management Services